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The Lexpert CCCA Corporate Counsel Directory & Yearbook is a joint endeavour of the Canadian Corporate Counsel Association and Lexpert. It provides the most extensive listing of corporate counsel in Canada.

Focus: Class action against computer manufacturer proceeds

A proposed class action against computer manufacturer Lenovo will move on to a certification hearing after the company failed in an attempt to have the case dismissed.

The plaintiff in Bennett v. Lenovo alleges the laptop he purchased online came preinstalled with Virtual Discovery, an adware program supplied by a third party that he claims affects the computer’s performance and leaves users’ privacy exposed.

Lenovo moved to have the entire claim dismissed, arguing that none of the causes of action advanced by the plaintiff stood any chance of success.

But in his Feb. 17 decision, Ontario Superior Court Justice Edward Belobaba sided with the customer, dismissing just one of the four claims made on his behalf.

Adrienne Boudreau, a class action lawyer with Toronto firm Sotos LLP who acted for the plaintiff, says she was pleased with the result.

“This is not like the traditional privacy-breach claims we have seen before. It’s a novel case for consumers, and the court recognized that it needs to go forward and get a hearing on its merits,” she says. “It’s a wake-up call for companies that are considering pre-installing this type of software on their devices that there are possible remedies for consumers.”

Lenovo’s lawyers declined an opportunity to comment, but since the decision was not appealed, the case now proceeds to a certification hearing later this year. If the action clears that hurdle, it would set the stage for a full trial to decide the merits of the remaining claims.

Daniel Bennett, the plaintiff in the case, is a St. John’s lawyer who hopes to act as a representative plaintiff for all Canadian purchasers of Lenovo laptops that came pre-installed with VD.

According to Belobaba’s decision, Bennett only discovered the program’s presence after taking delivery of his new laptop.

Bennett’s statement of claim, which has not been proven in court, alleges the program intercepts users’ Internet connections and causes the display of unauthorized advertisements in their web browsers. The claim also alleges VD slows the computer’s performance and depletes battery power, while allowing hackers access to users’ confidential personal and financial information.

Lenovo argued Bennett’s claim that the installation breached the implied term of merchantability under Ontario’s Consumer Protection Act should be dismissed because products with multiple uses can cross the “merchantable” threshold if they are still usable even with the defect for just one of their purposes. An activity such as offline word processing would fit the bill in its case, Lenovo claimed.

However, Belobaba allowed the claim to go forward after concluding the “law is not settled” in the “context of computer technology.”

“It’s a great decision for consumers, because it reiterates the strength of the protections available to them under the Consumer Protection Act,” says Boudreau’s co-counsel on the motion, Sabrina Callaway, who was also excited by the court’s refusal to dismiss Bennett’s intrusion upon seclusion claim.

“It shows the court is open to the possibility that the tort can be applied in a class action and also in a different and less traditional context than it has been considered elsewhere,” she adds.

Only a few years on from the Court of Appeal’s landmark decision recognizing the tort in Jones v. Tsige, Belobaba said it was “just evolving.”

“Its scope and content have not yet been fully determined. I am therefore not persuaded that it is plain and obvious and beyond doubt that, on the facts as pleaded, this particular privacy claim has no chance of success and is doomed to fail,” the judge added.

The claim also alleges VD’s installation violates a number of provincial privacy laws across the country. Again, Belobaba found that the “evolving” scope and content of the laws made it impossible for him to conclude that these claims were certain to fail, despite Lenovo’s argument that they were doomed by the lack of an allegation that any users were actually hacked as a result of VD’s presence.

The only claim Belobaba agreed to dismiss at this preliminary stage was Bennett’s allegation that Lenovo breached an implied term of the sales agreement that the laptop would come without any defects.

Belobaba’s decision said that when he clicked his acceptance of the sales agreement online, Bennett agreed to be sold a product that was offered “without warranties or conditions of any kind.”

Chad Finkelstein, a partner in the corporate commercial practice group at Toronto firm Dale & Lessmann LLP, says the decision should serve as a warning to the growing number of technology companies that preload software on their devices.

“Anyone who’s a manufacturer or vendor of products that include some kind of application installed by a third party will want to think about how they go about disclosing them to the end user,” he says.

“You could potentially be found vicariously liable for any privacy violations.”

Lisa Danay, a lawyer with Deeth Williams Wall in Toronto, says the decision is a notable one, despite its preliminary nature and the fact it settles little in terms of the current state of the law.

“Technology is constantly changing and this decision points to the need for law to evolve alongside the world of innovation,” she says.

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